Age pension burden set to rise: report

Half of Australian retirees tend to be very conservative with their savings, but a growing minority exhaust their balances completely before death, according to the Actuaries Institute of Australia.

New research commissioned by the Actuaries Institute has found nearly 50 per cent of retirees only draw down the regulated minimum from their superannuation balances.

However, the number of retirees who will exhaust their balances entirely is set to grow in coming years, according to the research.

The research data was taken from two sources: an Actuaries Institute-commissioned Plan For Life analysis of data from 15 large super funds, and ATO data provided to the CSIRO.

Advertisement

Advertisement

>New research commissioned by the Actuaries Institute has found nearly 50 per cent of retirees only draw down the regulated minimum from their superannuation balances.

However, the number of retirees who will exhaust their balances entirely is set to grow in coming years, according to the research.

The research data was taken from two sources: an Actuaries Institute-commissioned Plan For Life analysis of data from 15 large super funds, and ATO data provided to the CSIRO.

Anthony Asher, convenor of the Actuaries Institute's Retirement Incomes Working Group, says the key finding – that half of Australian retirees are conservative – contradicts "some views" that retirees tend to draw down their balances very quickly.

The current number of retirees that completely exhaust their superannuation balances is relatively small, at 5 per cent of SMSFs – but that number is expected to increase in coming years as the population ages, said the report.

The Actuaries Institute notes that approximately 20 per cent of superannuation balances held by retirees aged between 75 and 85 are being drawn down at more than 10 per cent, a level that the institute says is "unsustainable".

Mr Asher said more research must be conducted to understand why an increasing number of Australians are using up the entirety of their superannuation balances.

“It could be intentional and a natural step as their income needs decline, such that the age pension is sufficient at older ages. On the other hand, they may have lost money due to dementia, financial abuse of some kind, or poor decision making,” he said.

The data also highlighted that drawdown patterns were “remarkably similar” across retail, industry, corporate and SMSFs, despite industry funds having “significantly lower” average account sizes.